Companies

How Much of Wal-Mart Is Really Made in America?

Doug McMillon, the chief executive of Wal-Mart Stores (WMT), walked onto the stage at its U.S. Manufacturing Summit in Denver and gave the audience a cheery “Good afternoon.” No response. “At Walmart, we yell back, ‘Good afternoon,’” he said, smiling. The audience obliged. And so the August 14 meeting began.

Earlier in the day, the company reported a slow second quarter in the U.S. But none of the executives wanted to talk about that. They were there, for two days, to help their suppliers figure out how they can manufacture some of their products at home. “We come here with a deeper understanding of the challenges standing in the way of making U.S. manufacturing a reality,” said Michelle Gloeckler, the executive in charge of the effort.

Wal-Mart, as you may have heard, has pledged to spend an additional $250 billion over the next 10 years on products made in America. Boston Consulting Group has predicted this commitment will create 1 million jobs. Wal-Mart, of course, is the world’s biggest retailer and the biggest importer in the U.S. It employs 1.3 million “associates” in its native land, and revenue at Wal-Mart U.S. last year was $279 billion (as well as another $57 billion at Sam’s Club).

In other words, the numbers at Wal-Mart are almost always huge. But how much of the made-in-America commitment is real so far? First, let’s consider that when the company announced the manufacturing initiative in January 2013, executives noted that, according to data from its suppliers, “items that are made here, sourced here, or grown here account for about two-thirds of what the company spends to buy products at Walmart U.S.” How is that possible? Well, groceries account for 56 percent of sales; entertainment for 11 percent; health and wellness products for 10 percent; and apparel for just 7 percent. So Wal-Mart would naturally buy billions of dollars more of made-in-America goods over the next decade.

By the end of 2013, according to Wal-Mart’s Global Responsibility Report, the company’s “suppliers have announced extraordinary commitments to inject more than $100 million into factory growth and create more than 2,000 U.S. jobs.” Wal-Mart also created a $10 million manufacturing innovation fund: The first round of winners, all universities, were announced at the summit.

Bill Simon, who recently stepped down as CEO of Walmart U.S., touted the company’s progress to a meeting of suppliers in March:

“Element TV moved into a facility in Winnsboro, S.C. Today, I’m pleased to be able to show that assembly is under way. When at full capacity, they’ll employ 500 people in the Winnsboro region. … American Home Manufacturing is moving the production of their comforters to South Carolina. This facility will create 200 jobs. … 1888 Mills out of Griffin, Ga., makes towels for us. They were one of the first movers in this space, and just a year later, sales of the product are up 24 percent compared to the previous towels. They are expanding, and they just bought another huge facility in Griffin, 500,000 square feet, to grow their business.”

He didn’t mention how many new jobs that would mean. Nor did Simon mention how much any of these jobs pay. At least one company, Kent Bicycles, has said it located a new factory in South Carolina because of the state’s right-to-work law. The chief executive noted that Wal-Mart had introduced him to South Carolina’s Republican governor, Nikki Haley.

“We want customers with great jobs here in the U.S.,” McMillon said at the Denver summit. Executives showed ads to promote made-in-America products: stirring music and hopeful, thankful factory employees. Michael Araten, the head of K’NEX Brands, a toymaker, announced that next year the company would produce the wood for its Lincoln logs in America. Jim Stephen, the executive chairman of the Weber grill company, pointed out that the grills have always been manufactured in the U.S.

Toward the end of the two-hour presentation, Wal-Mart’s head of U.S. marketing, Stephen Quinn, reminded the suppliers in the audience to put “Made In America” on their products, even if that’s always been the case.